Average U.S. gas prices above $2 after climbing for 21 consecutive days
The national average price of gas climbed above $2 per gallon on March 24 for the first time in 2016, and average prices have increased for 21 consecutive days, says AAA.
Monday’s average price of $2.04 per gallon was up six cents per gallon on the week and 30 cents per gallon for the month. Despite the recent increase, average gas prices remain 39 cents per gallon less than a year ago.
Many refineries are conducting seasonal maintenance, which has led to a decline in fuel production, AAA explains. In addition, refineries are preparing to produce summer-blend gasoline. This blend of gasoline, mandated by the EPA, is less prone to evaporate and contribute to air pollution in warmer temperatures. Retailers in many parts of the country are required to sell this summer-blend of gasoline by June 1, and leading up to this deadline, refineries and storage facilities also adjust their supply in order to comply with the regulation.
During the months of March and April, refineries will begin the transition to producing and storing summer-blend gasoline, and often “sell-off” or “drawdown” on their existing supply of gasoline in order to make room for this seasonal gas. This reduction in supply often leads to higher prices at the pump, because during this transition period, demand for gasoline generally begins to increase as warmer temperatures motivate more drivers to take to the roads.
California ($2.77) remains the nation’s most expensive market for retail gasoline, and inventories in the state reportedly fell to an 11-week low due to ongoing refinery challenges and increased demand. Consumers in second-place Hawaii ($2.56) are paying 21 cents per gallon less than the market leader, and regional neighbors Nevada ($2.41), Alas- ka ($2.29) and Washington ($2.28) round out the top five most expensive markets for gas. On the other end of the spectrum, New Jersey ($1.83) and Missouri ($1.85) are the nation’s least expensive markets.
Retail averages in the vast majority of states (47) are higher on the week, and consumers in 28 states and Washington, D.C., are paying a nickel or more per gallon at the pump versus one week ago. Gas prices are up double digits in five states with the largest weekly increases experienced by drivers in Arizona (+14 cents), New Hampshire (+11 cents), Massachusetts (+11 cents) and Connecticut (+11 cents). Prices have fallen over this same period in three states, but in less dramatic fashion. Averages are down on the week in Michigan (-6 cents), North Dakota (fractions of a penny) and Minnesota (fractions of a penny).
With the exception of Hawaii (-1 cents), consumers nationwide are paying more to refuel their vehicles month-over-month. The average price at the pump is up by a dime or more per gallon in the vast majority of states (48) and Washington, D.C. on the month, and motorists in 35 states are paying averages that are up by a quarter or more per gallon over this same period. The biggest jumps in price have been in states west of the Rockies: Arizona (+52 cents), Nevada (+44 cents), and California (+40 cents).
Despite rising averages, consumers nationwide continue to see yearly savings at the pump. Drivers in 47 states and Washington, D.C., are saving more than a quarter per gallon when they refuel their vehicles, and averages are down more than 50 cents in a total of six states compared to this same date last year. Year-over-year, the largest savings in the price of gas are in Alaska (-63 cents), Illinois (-61 cents) and Oregon (-59 cents).
Varying expectations of future supply and demand have contributed to the global oil market’s overall volatility. As a result, the global price of crude oil continues to seesaw on news related to potential market influencers, and many traders are focused on the upcoming meeting between the Organization of the Petroleum Exporting Countries and non-OPEC producers scheduled for April 17.
An overall bearish sentiment persists and market fundamentals continue to point to oversupply. Despite ongoing talks, there is persistent skepticism regarding the prospects for reductions or freezes in production, and crude oil prices are likely to continue to remain volatile in the near-term.
West Texas Intermediate crude oil opened the week trading a bit higher, following a week of fluctuating prices due to news of increasing crude oil inventories balanced against reports of falling rig counts in the United States. The NYMEX was closed last Friday in observance of Good Friday, and WTI closed out last Thursday’s formal trading session on the NYMEX down 33 cents and settled at $39.46 per barrel.